So we have just announced that we will be working with Xen guys to get Xen-enabled Linux running well on top of Windows virtualization. This is all good news – and I personally am looking forward to seeing the results of this work.
We already support Linux on top of Virtual Server today, and have demonstrated Linux running on top of Windows virtualization – and this announcement really confirms that we have a commitment to interoperability and delivering viable solutions for people who want to virtualize heterogeneous environments (for some reason people have trouble believing us when we say this :)).
The official announcement is here: http://www.microsoft.com/presspass/press/2006/jul06/07-17MSXenSourcePR.mspx
Feel free to ask any questions in the comments and I will try to answer what I can.